The wave of consolidation that has swept through the industry's operator and supplier segments over the past decade has altered the broker segment, too. Larger brokerages have emerged, as independents have merged or been acquired. The rationale is that these larger organizations can represent more lines, and that the largest can do so from coast to coast. Nevertheless, independent brokers remain strong, and new ones continue to form. And a recently established network of independent brokers is setting out to offer manufacturers equivalent one-stop nationwide representation. This approach has been taken before, but times have changed.

Brokers have long played a key role as the communications medium between operators and suppliers. The broker who calls regularly on a variety of operator customers constantly learns what vending consumers will buy in particular markets and locations. The broker's principals rely on that knowledge, and their representatives' well-established customer relationships, to position their products most effectively in the vending channel.

Vending sales specialists also can play a key role in the development of new vendible products. They can leverage their relationships to test the viability of a new product in particular areas, and suggest adjustments to size, package and price point based on the feedback they get from their operator customers on the front lines.

In addition to serving manufacturers, the vend brokerage is an invaluable resource for operators, keeping them abreast of new products, offering guidance on merchandising strategies, helping them with staff training and the conduct of promotions, and making sure they get the most out of suppliers' incentive programs.

They also work hand in hand with product distributors to get merchandise to their operator clients and, ultimately, to keep the spirals turning to benefit all parties.

VENDING TIMES spoke with a number of vendible product sales specialists, from local independents to the largest nationwide sales agencies, along with an industry-leading distributor. They shared their perspectives on today's competitive and challenging market demands, and the measures they have taken to adapt.

THE INDEPENDENTS
'You Gotta Know The Territory'

Dave Gellman, founder of Gellman Associates (Norristown, PA), is convinced that the "bigger is better" movement taking hold in the brokerage market is not the best approach. This opinion is based on his four decades of serving the vending and OCS industry. With some of his once-local competitors now representing product lines nationwide and others joining forces to compete on the same national scale, Gellman is steadfast in his view that the locally focused, independent brokerage is the best partner for a supplier who wants close and devoted regional coverage.

The detailed knowledge of local operators and consumer preferences that these brokers possess cannot be easily duplicated by a larger organization, Gellman pointed out.

"Local brokers live and die in their territories without moving and changing personnel," he emphasized. "Big companies with wide territories are forced to fill in gaps with salespeople; but not all of them can be 'ownership people' who have decades-long relationships with their distributors and customers. The broker goes directly to the table with the decision-maker 90% of the time, which underscores how much that close and constant in-person connection means when it comes to selling product into the vending channel."

Gellman views the consolidation among brokers and expansion of territories that has taken place over the years as detrimental in many ways to the informal partnerships and professional camaraderie that long have benefited industry members.

Gellman pointed to the recent dissolution of the National Vend Brokers Association, of which he was founding president in 1976, to illustrate this view. He explained that the pioneering association was formed by a group of brokers, long-time comrades who formalized their relationships by creating NVBA as a networking association.

"We shared ideas, philosophies, ways to go to market, ways we compensated salespeople," he recalled. "One broker would refer lines he had to other brokers in other territories. But as local brokers merged, expanded and infringed on fellow members' territories, that sharing of ideas and resources became more and more inhibited, and the association eventually dissolved."

Given the changing competitive landscape, the pioneering broker, whose mid-Atlantic territory extends from metropolitan New York to the Virginia-North Carolina border, said he can identify with the rationale behind the recent establishment of Premier Broker Partners, a nationwide network of independent brokers, as a defensive posture.

He observed that all brokers now face competition not only from their local competitors, but from two Florida-based sales agencies with local roots, G&J Marketing & Sales (Palm Harbor, FL) and Burdette Beckmann Inc. (Hollywood, FL). Both companies have systematically expanded their territories in recent years, establishing salesforces that now blanket the entire U.S.

The geographic reach of these industry powerhouses has made their services an attractive selling-point for manufacturers who favor the simplicity of a one-stop shop, rather than seeking representation market by market. The formation of Premier Broker Partners is one way for smaller regional operators to vie for their piece of the pie, said Gellman, but he is skeptical about the business model's ultimate success.

"It appears to offer a competitive edge and to be attractive to the supplier as a single entity -- but a broker network is a group of individual companies, not a single company that can speak with one voice," Gellman observed. "There are bound to be many conflicts among lines already carried by some brokers that won't allow the group to make nationwide commitments across the board for all of its members."

Another difficulty that Gellman sees with a broker network is that each member company has its own procedures, from order entry to execution of programs and deals. "I don't believe several organizations can attain the uniformity and simplicity of dealing with a national broker organization," the veteran vend broker commented. A national network inevitably produces mismatches, with some members proving unable to do justice to some lines that they must take on, whether they want to or not, he added.

While Gellman sees the national-broker model as more viable than an association of local sales organizations, he pointed out that there also are problems with attempting to serve too wide a market. Nationwide brokers have the advantage of centralized procedures and a single point of contact, said Gellman, but expanding by setting up sales offices across the country creates a structure that is increasingly difficult to manage, with some local agents being more effective than others.

"I think manufacturers who want to outsource all of their sales efforts are the ones most likely to select the national brokerage organizations," he remarked. "Those who want to be more closely involved in managing their vending business will continue to look, market by market, for the most effective broker in each."

Janette Carter of Focus 365 (Anaheim, CA), a 20-year veteran serving 12 western states, agrees with Gellman that there is no substitute for a local broker's expertise in the markets he or she serves. "We know the demographic of the region, and what it orders," she pointed out. "What's popular in the South, you sometimes can't give away on the West Coast; only brokers entrenched in each market could tell you that. The West Coast is such a melting pot that you really have to know the intricacies of the market to achieve the best results in vending, which is our specialty."

Acknowledging that having one point of contact with a national broker may have its appeal to manufacturers, Carter said her team's solid sales performance and the close personal bonds she has forged with the principals she represents have gone a long way to earn their loyalty.

"Of course I'm subjective, but my view is that manufacturers who select a single broker for national representation are not necessarily positioning themselves for the most success," commented Carter. "What if the broker produces in the Northeast, but not in the South? The manufacturer is locked in, even if the numbers speak for themselves."

Carter is just as vocal about the new Premier Broker Partners group. "My view is that you can't be both independent and national. Even though the group is coming together, they represent competing lines," she said. "It seems like a logical way to compete for the national business, but with different people and styles and competing products, there's no way to serve every manufacturer who wants national service across every territory."

On a more personal note, Carter admitted her concern that the formality of the new broker network may sever some unwritten business ties that have existed for years between her and her fellow brokers.

"Throughout my career, I've had broker partners in other regions who I refer business to. I know they will serve my clients well in their regions, and they have reciprocated. It's worked well over the years," said Carter. "Now, suddenly, it's a conflict of interest to some of my long-time associates and friends in the broker network to refer business to me, which is another reason I'm not a big supporter of the concept.

"I still have agreements with many brokers based on mutual respect, and it works," she said in conclusion. "You don't need a formal agreement to work in partnership."

THE NATIONALS
Central Direction, Regional Flexibility

Burdette Beckmann Inc. (Hollywood, FL), one of two vending and OCS brokerages covering all 50 states, was founded more than half a century ago as a candy and tobacco sales agency serving south Florida. The company, led by president Robert Taylor Jr., expanded into vending in the mid-1980s. In 1998, Paul Van Vleck, a seasoned industry professional, came aboard as general manager of vending, as part of an aggressive strategy to expand the company's regional reach.

"We were losing opportunities because we weren't operating throughout the Southeast with a regional platform," recalled Van Vleck. "I was brought on after we lost a key account. Robert decided that we wouldn't be relevant if we didn't merge with another vend broker or expand in the Southeast." The company responded swiftly by making the first of many acquisitions that would continue over the next decade.

Another major turning-point that drove BBI to grow far beyond its Southeastern base came when a BBI client, dissatisfied with its existing representation in the Northeast, asked the Florida brokerage to represent its line in that market. That client helped BBI fund the infrastructure to make the bold move, including hiring a regional manager and acquiring a local brokerage. It also impelled the company to raise its sights and envision eventual nationwide coverage. From there, BBI has systematically been filling in the map through mergers with, and acquisitions of, more than a dozen well-established vending and OCS brokers.

"We targeted the best brokers in each region." Van Vleck recalled. "We've had many stay on, and we continue to bring on the best local talent." The BBI vending manager added that, because the company can recruit on a national level, its team consists of regional managers who bring a wealth of industry experience to the table: "We can find talent across 50 states, not just the best person in a given state or region."

He pointed to simplicity and efficiency as the hallmarks of a nationwide brokerage. "We bring higher 'speed to spiral' movement to our clients' programs," Van Vleck explained. "If a supplier has a promotion, materials can go out to our whole team the next day, and directions go out overnight with details on contacting accounts and following up. Between Monday to Friday, we can execute a national program. This isn't all that easy to do when you have multiple people and technologies in smaller local organizations."

The BBI executive also noted that a national broker has a broad knowledge of the markets throughout the entire country, which can be invaluable to its principals. "If a manufacturer wants to test a 'healthy' product, for example, I know how to test it in a geographic region that favors it, at an account like Google on the West Coast," he said. "We can find the best operators with the technology and reporting capabilities to gather the results, and we have the administrative staff to put it together for the manufacturer."

Van Vleck added that BBI's robust administrative and support team benefits its clients by enabling its field personnel to devote their time selling. "We have one person who processes rebates, another devoted to promotions and a dedicated analyst who makes sense of the numbers," he told VT. "Everyone reports to me and I watch the whole picture." BBI now is building software that will serve as an internal sales management tool, and allow manufacturers easy access to up-to-the-minute data on the brokerage's sales efforts.

Van Vleck observed that many large manufacturers, hit by the ailing economy, are devoting fewer of their assets to vending as a class of trade. "Maybe one person was running vending, and now also has retail or foodservice responsibility," he pointed out. "Vending is now not even a one-person job; it's a big task, and it has fewer people assigned to it. That's where brokers play a valuable role."

BBI's dedicated vending team currently represents 10 vendible product suppliers nationwide, and also provides local and regional representation for its many principals who prefer to select brokers market by market. It also has a separate unit that sells snacks and candy to "specialty market" sites, including large home improvement, craft, bookstore and movie-rental chains -- "Basically, any place with traffic where you can put a rack," Van Vleck explained.

The brokerage has also begun selling a range of products wider than the traditional vending mix, for the new unattended automated mini-marts offered by Avanti Markets and 365 Retail Markets, among others.

"It's a competitive advantage to sell not only to vending, but beyond," the BBI vending manager stressed. "In addition to reaching a broader customer base, we're finding manufacturers we represent selling into a specialty market who want to know about vending too, as they look to find growth."

A separate BBI team serves mass merchandisers like BJ's and Costco, along with c-stores and grocery stores.

Given the evolving competitive landscape, Van Vleck said he views the formation of Premier Broker Partners as a sound approach for smaller brokerages. "They're all quality houses with long histories of success in their markets. It gives them a new way to market themselves to manufacturers," he told VT. "I think there are a lot of questions about how it will be structured, but it makes sense for brokers to look for ways to meet new challenges."

In his view, there is plenty of business to go around for the brokerage market's diverse sales professionals and their varied approaches. "There are enough manufacturers that there is value to a nationwide broker like us, local brokers, and the new broker network," said Van Vleck. "I think every market can support four brokers. Each manufacturer chooses to manage a certain number of brokers: some more than 20, others fewer than nine. There are lines we can't represent nationally because they conflict with others we have already taken on."

G&J Marketing & Sales (Palm Harbor, FL) officially established its nationwide footprint last May after spending nearly two years developing the infrastructure to support the new model. As G&J president Greg Sidwell sees it, the ability to represent a product line in every market is the most effective way to meet the needs of today's fast-changing market.

Sidwell has also seen economic factors force manufacturers to cut back on the number of sales staff representatives who sell in the vend channel, and depend more on brokers. He has found that, as manufacturers shift more of their sales efforts to outside agencies, they especially appreciate having a single point of contact with a national organization like G&J.

"In vending, at the operator level there's consolidation, with national companies buying or franchising, and large regionals acquiring competitors," observed Sidwell. "And there's consolidation on the manufacturers' side, too. With consolidation in every area, we need a more streamlined way to go to market. If you see every segment consolidate, you need to do the same as a broker by expanding, consolidating and covering more territory or you diminish in value. That's what we saw, and it's why we tried to get out in front of the curve as much as we could."

G&J was established as a vending brokerage in 1986, covering the state of Florida. By 2008, the company had expanded across 12 states. Sidwell's acquisition of SpecMark Sales & Marketing (Northfield, IL) last spring positioned the company as a national marketer of candy, snacks, food and beverages to the vending and coffee service industry.

"SpecMark had many people on the street and a nationwide structure in place. We added sales reps and a manager," Sidwell told VT. "Things have gone very well, and taken off much faster than we anticipated."

The key to supporting coast to coast coverage was G&J's development of custom software that allows the company to manage everything from ordering and rebates to details on daily sales calls from coast to coast, from company headquarters. The Web-based sales tracking, analysis and compilation tool not only allows upper management to track every effort its sales reps make, deal they close and challenge they encounter, but also gives G&J's principals 24/7 access to this data.

Also crucial to the success of G&J's nationwide model was the appointment of four regional managers, all seasoned veterans in the vending and OCS industry. Despite the size and scope of his organization, Sidwell says the professionalism of his team and the structure of the organization allows him to maintain the personal touch on which he built his business.

"I have 25 sales reps on the street, and they don't live in Palm Harbor, where the corporate office is, and where I live," he said. "The local reps and the regional managers live in the markets they serve, which gives the same local flavor as a smaller local broker. The Western regional manager lives in Arizona; the central manager lives in Memphis, and they're all vending experts, guiding their local teams."

G&J offers the best of both worlds, added Sidwell, because it has that local advantage, but at the same time, every representative is strongly supported by his or her central office.

Each outside rep is assigned a dedicated administrative support person who assists with phone sales and email correspondence. "That allows them to make calls until the end of the day, and for the support work to be done centrally, rather than 25 brokers handing in 25 reports," he explained. "Our principals see a huge benefit in the streamlining of information we provide. They find that having one point of contact makes it easier for them to run their businesses. There's more consistency in terms of how programs are run and product is represented."

G&J also has its own in-house graphics department and is involved with helping some of its manufacturers develop point-of-sale and promotional materials, which also has been a big plus. "With some manufacturers, we're very involved with graphic design," Sidwell reported.

He has found that more and more manufacturers lack the resources they would need to devote in order to stay close to the operator, and so they rely on their brokers to provide concise feedback, market by market, in order to maximize their opportunities in the vending channel.

"There may be a product that's only a good seller in the Southeast, and so the Southeast is the only place they should sell it. And we're in a position to let them know that because we have a devoted salesforce in every territory," Sidwell instanced. "We stay on top with our operator customers to determine what products work and what don't, and to identify the overall trends. Are they pulling food from machines because it's spoiling before it sells? Are there items selling so fast that the drivers can't keep the spirals filled? We help the manufacturer make the right decision as to where and how to launch a product, and how to minimize the losses of a false launch."

G&J is also ideally positioned to assist companies new to vending in rolling out their products nationwide. "Many companies are looking at vending as an avenue of growth, and our knowledge and connection to operators is a valuable resource to them," the vending sales veteran summed up.

THE NETWORKS
Local Knowledge With National Scope

Andrew Young of Harold W. Young Co. (Natick, MA) is president of the new Premier Broker Partners, a nationwide sales organization formed by nine leading brokerages specializing in the vending and coffee service industries. He explained that the alliance of independent operators collectively can offer manufacturers local, regional or national coverage.

The members of Premier Broker Partners are grouped into five regions; national marketing is done as a group. "We created a template to report by market, then by region, then nationally," Young said. He explained that Premier is developing a proprietary reporting system to better serve manufacturer clients and help it advance from local to regional to national reporting.

Young emphasized that the members of the new organization have the utmost respect for the existing relationships with their fellow brokers that they have built over the years.

"The formation of the group was not in any way created to negatively affect other independent brokers," he emphasized. "It's just a consequence of a market where operators, manufacturers and distributors are consolidating. It's now necessary to look at the business not just locally, but regionally and nationally, as a proactive measure to address a changing marketplace."

Manufacturers require more resources from their brokers than they did in the past, including marketing, back-office support, sales and reporting, he pointed out. It's another plus for a sales agency to be national in scope.

Young emphasized that the value a brokerage brings to a manufacturer principal is the longstanding relationships it has established with local operators, and an in-depth knowledge of the market it serves.

The ability to offer regional coverage has become increasingly important, Young observed, as mergers and acquisitions have led to a growing number of vending operations that now serve larger territories. Through their alliance, Premier's partners are able to call on these companies' headquarters and regional branches.

And the group's ability to provide national support is vital to manufacturers who want coverage of national accounts. "If they call on Canteen and Canteen franchisees, we can make headquarters calls, follow up in every region and market, and then report back," he told VT.

Another advantage the broker consortium has is the ability to call on alternative trade accounts, including nationwide sporting goods, hardware and office supply stores and bookstore chains. The group's ability to serve such customers is crucial, in Young's opinion, as Vistar -- the nation's largest vending and OCS product distributor -- has diversified into these new areas of business.

"These nontraditional accounts have a national buying headquarters, so someone from the group makes a call nationally, but much of the business thereafter is done regionally," Young said. "Distribution may be from a number of regional warehouses, so our group is positioned to do everything needed to satisfy nationwide needs."

By acting as a unified team, Young said, the broker group can also offer manufacturers national marketing support, from developing a "go-to-market strategy" to executing dynamic sales presentations. He pointed out that Premier partners' ability to communicate through webinars, seminars and meetings allows them to coordinate their efforts, which is a big selling-point for manufacturers who otherwise would have to call their brokers one by one.

"We keep the local relationships that our partners have in each market, but on top of that, we continue to develop processes that simplify the whole experience for the manufacturer at a regional or national level," the Premier president said.

Premier Broker Partners also has an advantage over the national vend brokers with which it competes, in Young's view. Brokers who serve the entire country bring their principals an attractive one-stop solution, but Young feels they are limited by the enormous challenge of finding the right people in every territory to ensure the best representation. "The strongest brokers in every market offer a unique style, creativity and relationships they've garnered over the years, and that's something that's very hard to duplicate in every market across the country," he said.

PRODUCT DISTRIBUTORS
Vending's Essential Fulfillment Link

Vistar vice-president of sales and marketing Terry Touchton told VT: "We've seen consolidation at the operator level and the distributor level. It's natural to see it at the broker level, too. The most recent recession forced every company to look inside and reinvent themselves."

Vistar (Centennial, CO), a Performance Food Group company, is a leading provider of candy, snacks, beverages and convenience foods to vending, coffee service, retail, concession and theater operators.

To adapt to the changing environment, Vistar has been reaching "outside the box" by diversifying the retail markets it serves. "Vistar has a sizeable market share in vending, but a lot of that business has been lost in this economy as jobs have gone away," Touchton told VT. "So we've expanded our offerings with new lines that we sell into nontraditional markets."

Recent additions to Vistar's customer base include big-box retailers such as Michael's Crafts, Bed Bath and Beyond, Dick's Sporting Goods and Academy Sports. The Colorado-based distributor also has carved out a substantial niche supplying snacks, confections and convenience foods to bookstores and c-stores on university campuses throughout the country. Vistar has added more than 500 retail-oriented SKUs to supply these nontraditional channels.

Touchton said the new items are also well suited to the emerging unattended self-checkout "micro market" space being pioneered by companies like Avanti Markets, Company Kitchen and 365 Marketplace. "We have invested in planogram software that will allow us to build recommended sets for vend operators who are investing in these formats," the Vistar executive told VT.

Touchton's advice to industry brokers is to follow Vistar's lead. "Vending and OCS brokers need to get up to speed on the other market segments that we're getting into, or they will risk losing the business to someone else who is an expert," he said. "The way the market is changing and the lines are blurring, if brokers don't know retail, they need to learn it quickly and not continue to rely only on their vending and OCS skill sets. The diversification into nontraditional channels has created opportunities and challenges that vending brokers haven't had to consider until now."

Touchton reported that he works with brokers of all types, from independent local specialists to nationwide organizations, and all serve as a vital bridge linking the manufacturer, distributor and operator. One trend Touchton is seeing is a new division of sales effort by suppliers, with more companies making use of a broker salesforce to cover local markets, in conjunction with their own representatives at the national level.

"The national sales agencies were local at one time, and either were acquired or joined the new broker group," Touchton pointed out. "I think they all have a wealth of sales expertise to bring to the table by serving as an extension of the manufacturer's sales team."